In August 2018, the Hungarian government adopted Government Decree No.
143/2018 (VIII. 13) on the detailed rules applicable to the change of designated
purpose procedure, which further strengthened the regulation known as the
“Plaza Ban.” In particular, it extended the scope of the strict rules prohibiting shops
and shopping malls (referred to collectively here as “retail buildings”) with a gross
floor area of over 400 sq.m.
As a consequence, the owners of retail buildings with a
gross floor area of over 400 sq.m. face a new permitting
procedure in case of those (minor) alteration works
which were previously not subject to any permits.
Additionally, owners are not allowed to change the
designated purpose of office buildings, storage or other
premises with the intention of expanding the area of
their retail buildings, without seeking a permit from
the competent authority.
The rules of the construction, alteration and expansion
of retail buildings with a gross floor area of over 400
sq.m. and the change in the designated purpose
procedure known as the “Plaza Ban” law are contained
in the laws listed below:
- Chapter No. IV/A of Act LXXVIII of 1997 on the
Formation and Protection of the Built Environment
(the Act) (last amended in August 2018).
- Government Decree No. 143/2018 (VIII. 13) on the
detailed rules applicable in the change of designated
purpose procedure (the Government Decree), which
came into force in August 2018.
- Government Decree No. 5/2015 (I. 29).
Before the recent amendment of the Act and the
adoption of the Government Decrees, only the
construction, alteration and expansion works carried
out in retail buildings with a gross floor area of over
400 sq.m were subject to the “Plaza Ban” rules. As from
August 2018, however, there are further restrictions
on the owners of larger retail buildings, such as, for
example, the requirement of government approval
for even minor alteration works.
The rules of the “Plaza
Ban” where a building
permit is required
As noted above, the affected
properties are retail buildings
with a gross floor area of over 400
sq.m., where the owner intends to
conduct construction, alteration or
The Act defines retail buildings as
shops and shopping malls, and
refers to Act CLXIV of 2005 on
Trade, which provides more details.
Under the Act on Trade, “shops”
are such buildings, independent
sections of buildings, or areas
constructed or used for trading
activities where trading activities
are pursued. Shopping malls are
multi-purpose buildings or multiple
buildings consisting of a complex
of commercial units, mostly shops,
which represent permanently
established merchandisers of
different types and offer various
types of entertainment and leisure
services to visitors.
Owners of retail buildings submit
their application for a building
permit to the local building
authority. The local building
authority has 75 days to grant the
building permit to the applicant.
Within this time limit, it is obliged
to obtain prior approval from the
government office, which must
consider any detrimental impact of
the retail building in terms of the
local environment, transportation
and urban development, and
must decide whether that impact
outweighs the potential advantages
of the construction, expansion or
alteration of the retail building.
Before making its decision on the
approval, the government office is
obliged to discuss its assessment
with a committee made up of
delegates from the competent
ministries. The committee’s opinion
must be taken into consideration,
although it is not binding on the
Before submitting an application for
a building permit, the owner has the
opportunity to ask for prior approval
of the government office by
contacting the office directly. If such
prior consent is granted, the owner
may initiate the building permit
procedure, and the local building
authority will not have to obtain the
approval of the government office.
The owner has one year to make
use of the prior approval once it
has been granted.
Changes in designated
The activities which are subject to the new permitting
procedure are as follows:
a) Changing the function of buildings with a gross
floor area of at least 400 sq.m. to retail purposes.
b) Minor alteration of a retail building — where
a building permit is not required — where
the alteration expands the gross floor area
of the building to exceed 400 sq.m.
c) Minor alteration of a retail building with a gross floor
area of over 400 sq.m. — where a building permit is
In relation to point (a), it is no longer possible,
without the approval of the government office,
to build retail units in buildings with a gross floor
area of 400 sq.m. by changing the function of
the existing building for retail purposes. So if, for
example, the owner of an office building (with a
gross floor area of over 400 sq.m.) wishes to covert
that into a retail building, they must now initiate the
change in the designated purpose procedure.
The change in the designated purpose procedure
also governs situations where a retail building is
expanded so that its gross floor area will exceed
400 sq.m. (point (b)).
In relation to point (c), it should be noted that a
retail unit of a shopping mall does not constitute an
independent retail building, thus any minor alteration
works carried out in a retail unit will result in the
shopping mall being required to initiate the change
in designated purpose procedure.
Government Decree No. 253/1997 (XII. 20) on the
national settlement planning and construction
requirements provides the definition of “alteration
works.” These are defined as construction works
carried out in order to alter the floor plan or external
appearance of an existing building (or part of a
building) without expanding the internal volume.
The rules of the change in designated purpose
procedure apply, for example, if the owner intends to
erect, or take down an internal partition wall or change
the location of a fitting room inside a retail unit.
Under the Government Decree, the owner (prior to
starting any of the above activities) must submit its
application for a permit to the local government.
The notary will forward the application to the
government office, which has 60 days to grant its
approval. Unlike the building procedure, the local
notary does not decide whether the permit should
be issued or not, as this falls within the competence
of the government office. However, the same
administrative deadline applies (75 days from receiving
the application) and the notary has to obtain the
government office’s approval within this period.
As noted above, the change in designated purpose
procedure covers activities which were not previously
subject to any permitting rules. Under the Government
Decree, if any of these activities are undertaken without
a permit, the owner of the building may be fined or
prohibited from using the premises as a retail building.